Tax Mistakes Creators Make

FREE TAX EXTENSION FILING SESSION 📆

This Thursday, April 10th at 1PM PT (4PM ET) we’re hosting a free tax extension filing session with Kevin O’Connell from C3FO.

We’ll answer Q&A questions live, cover what you need to know about tax extensions, and how to file one ASAP.

Just join the Discord via the link below, then join the “stage” channel at 1pm on 4/10.

Creator Tax Stuff You Need to Know

If you missed the workshop with Stan, here are some of the critical points you need to know about managing your creator business taxes.

Business Structure

When Should You Get an LLC?

An LLC gives you liability protection by separating your personal and business assets. While some folks think LLCs are just for people with teams, you can still have an LLC as a solo creator.

Consider an LLC as soon as you’re paying other people.

When Should You Consider an S-Corp Election?

An S-Corp election can save you money on taxes—but it’s often talked about as a one-size-fits-all, rather than the complex shift that it is.

This leaves many creators filing an S-Corp election far too early, then ending up net negative when the fees to set it up outweigh the tax savings.

Expert advice: If you’re making less than $80k, the tax savings from an S-Corp probably won’t justify the added complexity and expense of setting it up. It generally makes sense between the $80k-$100k+ mark.

Keep Business and Personal Separate

We couldn’t state this enough in the workshop—commingling person and business finances is a recipe for tax headaches.

Come tax time, you’ll be sifting through transactions line by line attempting to accurately identify which are business. Plus, if you’re ever audited, it’s tougher to prove which expenses were business vs. personal.

How to Fix This Mistake if You Have Commingled

• Set up a separate business bank account immediately. (Join the Karat business banking beta.)

• Get a dedicated business credit card (not necessary; you can use just your business bank account’s debit card)

• Track all business expenses through these accounts

Creator Specific Deductions

Deductions are another area creators need to be careful. While there are several deductions you can take, you can’t write off anything.

Equipment

Items like cameras, computers, lighting, and microphones are deductible.

For more expensive items ($2,500+) you may need to depreciate the item over time rather than deduct it all at once. (speak to an accountant about this)

Home Office

If you have a dedicated space used regularly and exclusively for business purposes, you can deduct a portion of your rent or mortgage.

Misc. Expenses

There are a few miscellaneous expenses that you can deduct, but they’re a bit more nuanced:

• Travel costs if the primary purpose is content creation

• Clothing for photoshoots/business purposes

• Hair and nails if done specifically for a photoshoot or content

• Meals if it’s for a business meeting

We see this all the time: But doesn’t my content depend on my image? So shouldn’t I always be able to write off my clothes?

Simply put: No. (in most cases)

But here’s where the nuance comes in:

• If you’re renting clothes and returning it afterwards, that’s 100% a business write off. You just rented it for the shoot.

• If you are buying the clothes for the shoot but wearing it later on date night, you’re not supposed to write off the full value.

• The question you have to ask yourself: What’s the level of risk I want to take to write off a portion of this? How defensible is this? Can I argue that this was only used for business purposes?

• If you’re working with a good CPA, you can probably write off a portion of it, at the very least.

Quarterly Taxes and Filing

Creators should be paying taxes four timer per year, not just on April 15th. These payments are based on estimated income and help you avoid underpayment penalties.

Quarterly Tax Due Dates

• April 15

• June 15

• September 15

• January 15

Extension Reminders

Filing an extension gives you more time to file, but not more time to pay.

What does this mean? If you file an extension and there is a balance due, you may be subject to penalties and interest that accrues while you take the extra time to file.

When to Hire Professional Help

If you’re making less than $80,000 per year, you can likely handle filing your own taxes using a software like TurboTax.

Hire professional help if:

• Revenue exceeds $80k.

• You have an S-Corp.

• You have multiple income streams.

• You have employees or more complex contractor relationships.

Expert tip: You shouldn’t pay more than 10% of your income for bookkeeping + CPA services. For reference, an entry-level bookkeeping typically charges around $500/month.

TikTok Ban Update

If you feel like this has been going on for ages…it’s because it has.

Last week, President Trump gave TikTok another 75 days extension on federal TikTok ban law. This now gives TikTok until June 19th to divest from or sell the platform.

While several people—including MrBeast, Jeff Bezos, and Kevin O’Leary—have expressed interest in purchasing TikTok, a deal hasn’t been closed quite yet.

Quick Links

❌ Meta no longer fact-checking on IG, FB, or Threads.

🍪 Food creator needed for $9k/mo UGC opportunity.

👀 Updates to YouTube Shorts views.

This Week in Creator Studio

This week in Creator Studio (our free Discord community) we’re interviewing Brett Dashevsky, founder of Creator Economy.

He’s building the premier network for content creators, marketers, and industry leaders through:

• curated events

• strategic partnerships

• thought leadership

He’ll be joining us to share some of his insider industry insights. It’s a conversation you don’t want to miss.

See ya next week,

Karat